Our Micro-Enterprise and Business volunteer program provides a large range of projects for volunteers to work with rural community businesses, in this case focused on rural tourism. Whenever we receive business volunteers it is very exciting for the GVI Peru team, as we get to see people from different backgrounds trying to develop new skills or apply their own to new contexts. Our usual business volunteers like to focus on marketing, social media, branding, however in this case we got a volunteer interested in project management and business models.
In January 2020, we started working with a rural tourism association named Mariposas from Valle Chosica community. At first, our work was centered on our English for Business program, in which we teach them four English modules in order to have basic English to communicate with tourists. As we spent more time with these women, they requested to work on certain topics to improve their business as a tourism association, one of these topics was costs, specifically for their artisan work that they sold at the Chinchero market.
Which was the issue?
The women knew their products were sold at very low prices, however, they did not have the exact numbers to know the magnitude of the problem. In many cases, they had products that took a very long time to handmade but then at the market they had to compete with prices from other producers, many with machine made products. This situation was difficult on them, as they worked hard on their products but they felt the sale prices were not fair with them.
Which was our solution?
Our business volunteers created an Excel model to learn more about the costs of the main products sold. We had several interviews with the Mariposas’ women to learn more about materials, processes, sale costs, among other information that was important to make the business model work.
After several weeks of work and trying to verify information in other markets, we had very important results to share with the community. It was observed that the products that take the longest production time had the lowest profit in effective salary. For example: the famous Chinchero design blankets could take up to four months to make, but whenever it was sold the price would only cover materials but not hours of work, or it would pay up to 1 sol (0.30 USD) per hour or even less. The women from the association only took into consideration materials’ costs and from that base they will put a sale price, they did not take into consideration all the hours of work.
Board used to identify materials, time, process, production cost and sale costs.
Besides, the natural red and purple wools dictate the highest cost of certain products, in order to get to these colors the red dye is obtained from chinchilla, which is very expensive in the Peruvian market. Red is one of the most used colors in the artisan work in Chinchero and is very important to have that color in most of these women’s work. Finally, the sale prices are dictated by a market with lower quality products, which results in lowering prices of better products. In this case, products made with alpaca or baby alpaca have to compete with synthetic fabric. As customers sometimes do not check on the difference, they just buy what they think is better quality when in many cases is not the reality.
Products used for our business model
This was just the first part of our research, we want to continue to apply our model in other associations so we can have comparable prices, costs, materials and processes. Are you interested in joining our volunteer work and finding better business solutions for the Cusco communities? Come and join us in GVI Peru, we need all the help we can get!